Related provisions for MCOB 4.1.4
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Where all or part of the regulated mortgage contract to which the illustration relates is an interest-only mortgage:(1) the illustration must include the sub-heading 'Cost of repaying the capital' with the following text under it:'You will still owe [insert amount of loan on an interest-only basis] at the end of the mortgage term. You will need to make separate arrangements to repay this. When comparing the payments on this mortgage with a repayment mortgage, remember to add any
(1) The limitations in MCOB 4.4A.1 R include any limitations on the regulated mortgage contracts the firm will consider from within the relevant market. A firm which is offering services to a customer in respect of more than one type of relevant market must describe its services in relation to each such relevant market.(2) For these purposes, there are two relevant markets for regulated mortgage contracts (apart from lifetime mortgages): one for regulated mortgage contracts that
(1) If a firm is not offering to the customer products from an unlimited range from across the relevant market, its disclosure on product range in MCOB 4.4A.1 R must either:(a) list the names of all the mortgage lenders whose products it is offering; or(b) inform the customer of the number of mortgage lenders whose products it is offering and that he has the right to request a list of those mortgage lenders.(2) If a customer requests the list in (1), the firm must provide it in
(1) Firms are reminded that, in the light of the rules and guidance in SYSC, they should have adequate systems and controls in place to ensure that the disclosure they make to a customer about their service reflects the service the customer is actually offered.(2) Firms are also reminded that Principle 7 (Communications with clients) and MCOB 2.2.6 R (Clear, fair and not misleading communications) are also relevant to how they describe their services, including in any business
(1) The information about the basis of remuneration required by MCOB 4.4A.1R (2) must include all relevant information, including the following details:(a) any fees which the firm will charge to the customer;(b) when any such fees will be payable and, if applicable, reimbursable; and(c) whether the firm will receive commission from a third party and, if applicable, any arrangements for offsetting this against any fees charged.(2) The details in (1)(a) must be expressed, where
(1) In many cases, MCOB 4.4A.12 R means that information will be given at the time of the first contact between the firm and the customer. However, there may be circumstances, for example in relation to a loan for a business purpose, where the possibility of the customer entering into, or varying the terms of, a regulated mortgage contract is only identified after preliminary discussions. The relevant disclosure is only required once this possibility is identified.(2) MCOB 4.4A.12
(1) If at the point that initial disclosure must be made in accordance with MCOB 4.4A.1 R, MCOB 4.4A.2 R, MCOB 4.4A.4 R and MCOB 4.4A.8 Ra firm is uncertain whether the contract will be a regulated mortgage contract, the firm must:(a) make the initial disclosure; or(b) seek to obtain from the customer information that will enable the firm to ascertain whether the contract will be a regulated mortgage contract.(2) Where (1)(b) applies, the initial disclosure must be made unless,
In relation to a regulated mortgage contract for a business purpose or with a high net worth mortgage customer7, if a firm has opted for the tailored route, it must adopt the following modifications to the sourcebook:333(1) (except in relation to sections 5 and 8 of any combined initial disclosure document) substitute an alternative description of the facility provided under the regulated mortgage contract for 'mortgage' where that term is used in any disclosure;733337(2) substitute
The disclosure rules in MCOB place particular emphasis on the description of borrowing. Where the regulated mortgage contract is for a business purpose or with a high net worth mortgage customer7, a firm should reflect this emphasis in any disclosure by first describing any borrowing before addressing the other facilities provided under the regulated mortgage contract.
For the purposes of MCOB 4.7A.2 R:(1) a regulated mortgage contract will not be suitable for a customer unless the regulated mortgage contract is appropriate to the needs and circumstances of the customer;(2) a firm must base its determination of whether a regulated mortgage contract is appropriate to a customer's needs and circumstances on the facts disclosed by the customer and other relevant facts about the customer of which the firm is or should reasonably be aware;(3) no
For the purposes of MCOB 8.5A.2 R: (1) an equity release transaction will not be suitable for a customer unless the equity release transaction is appropriate to the needs and circumstances of the customer; (2) a firm must base its determination of whether an equity release transaction is appropriate to a customer's needs and circumstances on the facts disclosed by the customer and other relevant facts about the customer of which the firm is or should reasonably be aware;(3) no
1The guidance on initial disclosure requirements in MCOB 4.4A3 may be relevant; in this context, that guidance should be read using home purchase plan terminology instead of the equivalent regulated mortgage contract terminology, where appropriate3.Additional requirements for distance home purchase mediation contracts with retail customersNote: The rules regarding additional disclosure requirements for, and cancellation of, distance home purchase mediation contracts are set out
3For the purposes of MCOB 4.10.5A R:(1) a home purchase plan will not be suitable for a customer unless the home purchase plan is appropriate to the needs and circumstances of the customer;(2) a firm must base its determination of whether a home purchase plan is appropriate to a customer's needs and circumstances on the facts disclosed by the customer and other relevant facts about the customer of which the firm is or should reasonably be aware;(3) no advice must be given to a
If, notwithstanding the steps taken by a firm to comply with MCOB 1.6.3 R, it transpires that a mortgage which the firm has treated as unregulated or as a regulated credit agreement4 is in fact a regulated mortgage contract, the firm must as soon as practicable after the correct status of the mortgage has been established:(1) contact the customer and provide him with the following information in a durable medium:(a) a statement that the mortgage contract is a regulated mortgage
(1) MCOB 1.6.4 R(2) means, for example, that if a firm discovered immediately after completion that a loan was a regulated mortgage contract, the firm would be required to comply with MCOB 7.4 (Disclosure at the start of the contract).(2) Although MCOB 1.6.4 R recognises that firms may become aware that a mortgage is a regulated mortgage contract at a late stage, the FCA expects this to be an extremely rare occurrence. It could arise, for example, if a firm has acted on the understanding,
4For the purposes of MCOB 4.4A.2R (1) there is one relevant market for equity release transactions. Accordingly, a firm offering a customer only lifetime mortgages or only home reversion plans must include in its disclosure under MCOB 4.4A.1R (1) that it is limited in that regard in the range of products that it can offer to the customer.
Table of modified cross-references to other rules: This table belongs to MCOB 8.3.1 R.
Subject |
Rule or guidance |
Reference in rule or guidance |
To be read as a reference to: |
Additional disclosure for distance mortgage mediation contracts |
MCOB 4.5 |
(1) There are certain additional disclosure requirements laid down by the Distance Marketing Directive that will have to be provided by a mortgage intermediary,6 a home purchase intermediary and a SRB intermediary64 to a consumer5 prior to the conclusion of a distance mortgage mediation contract,66 a distance home purchase mediation contract4 or a distance regulated sale and rent back mediation contract.6 The purpose of this section, MCOB 4.5, is to set out those additional requirements.
If the initial contact7 is with a consumer5 with a view to concluding a distance mortgage mediation contract,6 a distance home purchase mediation contract or a distance regulated sale and rent back mediation contract6,4 a firm must:7546(1) in addition to initial disclosure information and any other required information, provide the consumer5 with the information in MCOB 4 Annex 3 in a durable medium in good time before the conclusion of the distance mortgage mediation contract,6distance
(1) The information in MCOB 4 Annex 3 will be provided in 'good time' for the purposes of MCOB 4.5.2 R (1), if provided in sufficient time to enable the customer to consider properly the services on offer.(2) An example of the circumstances in which MCOB 4.5.2 R (4) or (5) may apply is given in MCOB 4.4.4 G. If the initial disclosure document and accompanying information (including that in MCOB 4 Annex 3) was previously provided to a customer and continues to be appropriate, there
Before: (1) entering into a regulated mortgage contract with a customer; or(2) making a further advance on an existing regulated mortgage contract; or (3) changing all or part of a regulated mortgage contract from one interest rate to another;1a firm must disclose to the customer:(a) in the illustration provided in accordance with MCOB 5, MCOB 7.6.7 R, MCOB 7.6.18 R, MCOB 7.6.22 R, MCOB 7.6.31 R, or MCOB 9; and(b) in the illustration provided as part of the offer document in accordance
If a firm makes an offer to a consumer2 with a view to entering into a regulated mortgage contract which is a distance contract, it must provide the consumer2 with the following information with the offer document:232(1) the EEA State or States whose laws are taken by the firm as a basis for the establishment of relations with the customer prior to the conclusion of the regulated mortgage contract;(2) any contractual clause on law applicable to the regulated mortgage contract
(1) Initial disclosure requirements apply4 only in relation to varying the terms of an equity release transaction4 entered into by the customer in any of the following ways:44(a) adding or removing a party;(b) taking out a further advance; or(c) switching all or part of the lifetime mortgage3 from one interest rate to another.13(2) Otherwise, this chapter applies in relation to any form of variation of an equity release transaction.444